Insider at Solana’s Cypher Protocol Admits to Stealing $300K

Solana-based crypto trading protocol Cypher has endured its share of hacks and heists. But its latest loss – of money meant for down-bad customers – was an inside job.

On Tuesday, a pseudonymous developer known as Hoak admitted to stealing hundreds of thousands of dollars worth of cryptocurrencies from Cypher’s hack reimbursement fund. “I took the funds and gambled them away,” Hoak said in a statement, blaming his activity on a “crippling gambling addiction.”

Hoak’s admission comes one day after Cypher’s founder Barrett accused him of systematically draining troves of valuable cryptos from the protocol’s redemption contract over multiple months, beginning in December. Citing on-chain data, Barrett said Hoak ultimately sent assets worth around $300,000 (at current market prices) to Binance, presumably to cash them out.

Hoak broadly stated Tuesday that “the allegations are true.” In a tweet, he said he doesn’t expect anyone “to let this go unpunished.” Barrett told CoinDesk he had sent information about the heist and Hoak’s true identity to law enforcement and was following their lead.

“This is incredibly saddening to me. I never thought this would be a possibility, having a core contributor who stayed on after the exploit to try and rebuild the project be the one who rugged funds from the redemption contract,” Barrett wrote.

Cypher contributors created the redemption contract to reimburse customers who shouldered a $1 million loss in an exploit in August. Barrett said the team discovered the funds were missing after one user reported issues in claiming their redemption.